The World Bank has chosen the Commonwealth Bank of Australia (CBA) to create and develop a pioneering new platform to allow bond trading via blockchain.
Bonds typically involve an exhausting and complex process to use, purchase and shift capital around the world from global entities and large corporations.
The CBA hopes to be able to use blockchain technology, which is a publicly available digital record of all financial transactions. It is typically used in cryptocurrency dealings to streamline some of the processes around bond acquisitions and general trading.
This move by the World Bank will enable much easier processes for raising capital on the market and raising and issuing bonds. At present, the debt capital markets are full of interconnected processes that can, at times, be incredibly hard to break down and separate for an individual focus on one aspect. Breaking down the barriers to these various financial agents will hopefully allow for much simpler bond trading.
With its name originating from the beach of the CBA’s hometown in Sydney, the Bond-i (Blockchain Offered New Debt Instrument) platform itself developed on Australian shores. The Blockchain Centre of Excellence at the CBA Innovation Lab worked together with experts in the investor community, including the Treasury Corporation of Northern Victoria, QBE and the Northern Trust.
Microsoft is independently reviewing all the architecture to appropriately test the various security measures that must be in place as well as the viability of the platform and software itself.
When ready, the Bond-i platform will allow for the levying of debt instruments such as bonds and equities via a blockchain mechanism and will be operating in both Sydney and the headquarters of the World Bank in Washington, DC.
Arunma Oteh, Treasurer of the World Bank, said in a statement that these developments allow the bank to “prudently seek opportunities for us to meet investor needs as well as the needs of our clients”.
The World Bank has confirmed it hopes that emerging technologies such as these can be quickly equipped to allow developing economies around the world to maximize the opportunities from faster and less complex financial transactions while becoming more aware and vigilant of what can go wrong in the markets.
While funding various long-term projects to help promote sustainability and alleviate poverty, the World Bank is also putting money behind disruptive technologies in the hopes of speeding up the process and offering different solutions. It provides some $50bn-$60bn yearly in these types of bonds to encourage sustainable development, and blockchain will form a clear part of its efforts going forward.
Denis Robitaille, World Bank CIO, said that one of the organization’s main tactics for “reducing poverty and promoting lasting development” would have to come from “helping countries transition to technology-led development”.
Robitaille also mentioned that this work falls into the key structure of the bank’s Innovation Lab. He called this blockchain deal between the World Bank and the CBA a “milestone in our efforts” to help show client countries the “opportunities and risk” that come with developing and disruptive technologies.
This blockchain partnership comes as the next step in a series of the CBA’s moves to use internet-based technologies to track transactions, including the transfer of a shipment of almonds from Australia to Germany using Internet of Things (IoT) mechanisms.